Gold prices settle modestly lower in choppy trade, copper rises on China reopening hopes

Price action

• Gold for February delivery
  GCG23,
  -0.24%
   
  GC00,
  -0.24%
  fell $2.5, or 0.1%, to settle at $1,787.70 per ounce on Comex, according to FactSet data.

• March silver
  SIH23,
  -1.04%
   
  SI00,
  -1.04%
  dropped 13 cents, or 0.6%, to end at $23.20 per ounce.

• March palladium
  PAH23,
  -2.41%
  fell $41.70, or 2.4%, to end at $1,664.90 per ounce, while January platinum
  PLF23,
  -1.58%
  declined $12.30, or 1.3%, to finish at $987.70 per ounce.

• March copper
  HGH23,
  -0.27%
  climbed 2 cents, or 0.6%, settling at $3.78 per pound.

Market drivers

Gold rose as high as $1,808.60 per ounce in the morning session on Monday, later losing momentum to trade in the red at around $1,793.20, before settling well off its lows at $1,787.70.

The ICE U.S. Dollar Index
DXY,
+0.02%,
a gauge of the dollar’s strength against a basket of rivals, fell 0.1% to 104.69. Treasury yields rose on Monday, with the yield on the policy-sensitive 2-year Treasury 
TMUBMUSD02Y,
4.245%
advancing to 4.249% from 4.180% on Friday. The yield on the 10-year Treasury 
TMUBMUSD10Y,
3.582%
 jumped to 3.583%.

“Gold prices edged lower as global bond yields surged after former Fed’s Dudley told investors not to fight the Fed. Dudley sees the Fed firmly locked in a very hawkish stance and is pushing back on the idea that policymakers could cut rates at the end of next year,” wrote Edward Moya, senior market analyst with OANDA, in a Monday note.

Bill Dudley, former New York Fed President, warned investors in a Bloomberg opinion article on Monday that the central bank will have to tighten more to achieve its inflation objective if markets still remain optimistic about rate cuts next summer.

Fed funds futures traders still suggest a peak federal-funds rate of less than 5%, about 20 basis points lower than the Fed’s projections of 5-5.25%, with rate cuts beginning in May 2023, according to CME FedWatch Tool.

Copper prices jumped over 1% on Monday morning to $3.82 per pound, boosted by hopes that companies are resuming activities in China as COVID-related restrictions relaxed, said Valeria Bednarik, chief analyst at FXStreet.

Over the weekend, Chinese authorities pledged to restore and expand consumption, while supporting the private sector in order to strengthen the economy next year, as they concluded a meeting setting economic policy priorities for 2023.

See: Asia weighs on Treasury market as traders assess possible BOJ shift, China reopening